3R Strategy Reveals Salary Budget Trends in 2024 Ahead of New Year

The UK-based pay and reward consultancy, 3R Strategy, has released new research revealing that the financial sector is likely going to have the biggest salary growth in 2025, with budgets rising by five per cent, 1.5 per cent more than the average across the UK. 

The fourth iteration of the Global Salary Planning Report collected data and insights from over 40 countries and 20 industries. It provides a detailed analysis of the salary budgets in 2024. It also predicts what the scene will look like in 2025, alongside data on pay transparency, communication, performance-related pay, the use of salary data, and gender pay gap reporting.

While most sectors, including manufacturing, retail, and FMCG, anticipate lower wage increases in 2025 compared to those awarded in 2024, the financial services sector is one of few to plan a consistent pay budget increase of five per cent, the highest among all industries.

As the sector continues to experience fierce competition for skilled professionals, particularly in areas such as risk management, compliance, and technology, this demand drives companies to offer more competitive salary packages to attract and retain top talent.

“The fact that financial services are set to lead the way in wage growth projected for next year comes as no surprise. There are several factors at play, including intense competition for talent, retention of key technical skills, and overall economic recovery. It will be interesting to see if the recent Autumn Budget affects these plans and how the sector responds,” said Rameez Kaleem, founder and managing director of 3R Strategy.

“We hope our report will serve as a valuable resource for 2025 salary planning to help businesses attract and retain talent.”

Rises alongside the National Living Wage

Importantly, in the recent Autumn Budget, the government announced a National Living Wage increase of 6.7 per cent from April 2025, which surpasses the planned pay budget increases for that year. Employers will need to account for this, as a 3.5 per cent budget doesn’t mean that everyone can receive a 3.5 per cent pay increase – entry-level positions that are paid at the National Living Wage will require a 6.7 per cent rise.

Additionally, the budget includes an increase in employer National Insurance Contributions (NIC) from 13.8 per cent to 15 per cent. While the impact on pay budgets remains uncertain, some organisations may choose to offset this by adjusting their overall pay budgets.

Pay communication is getting better but can still be improved

According to broader survey data, nearly two-thirds (64 per cent) of organisations surveyed have implemented clear pay principles and processes. However, the emphasis should now be on effectively communicating these to foster trust and understanding among employees.

While 57 per cent of companies engage in some form of pay communication, 3R Strategy notes there’s a significant opportunity to improve both the reach and quality of this communication. As many as 35 per cent of respondents don’t communicate this crucial information to their teams at all.

Although 68 per cent of organisations have salary ranges, only 26 per cent make them available to employees in at least some countries. To build trust and engagement, businesses should prioritise carefully communicating this information to bridge the gap in pay transparency internally.

Pay transparency

There’s a growing awareness of the need for greater pay transparency, as evidenced by a reported 66 per cent of organisations displaying pay ranges on job adverts in at least some countries. This aligns with the EU Pay Transparency Directive, regulations aiming to increase pay transparency and ensure fair and equal pay in the European Union (not directly applying to the UK due to Brexit).

However, 29 per cent of respondents still don’t include salary ranges when advertising open positions, potentially missing out on attracting a wider pool of highly talented candidates.

Furthermore, the results reveal that more than half (51 per cent) of organisations still ask for candidates’ current salaries, a practice that can perpetuate pay disparities and hinder diversity efforts.

Gender pay gap reporting

While overall gender pay gap reporting is mandatory in some countries, such as the UK, more detailed reporting by job level or grade is becoming increasingly relevant in other regions due to the EU Pay Transparency Directive. Currently, only 28 per cent of companies are reporting gender pay gaps by job level. Despite requiring careful preparation, this kind of reporting can surface potentially concerning trends that might be hidden in organisation-wide figures.

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